"In the second quarter we continued to execute on our key strategies and delivered core results that were up significantly year-over-year across the board," said Nora M. Denzel, Outerwall's interim chief executive officer. "Although we recognized a goodwill impairment for ecoATM during the quarter, given its unique value proposition, we still expect ecoATM revenue growth and profitability over time as the business scales. Overall, our outlook for the second half of 2015 remains positive, with a strong box office expected in the fourth quarter."

The company also separately announced today that its board of directors has appointed Erik E. Prusch as chief executive officer effective July 31, 2015. Prusch will succeed Denzel, who will remain on the board.

"Erik joins Outerwall with more than 25 years of successful leadership and operations experience in consumer, retail, and technology companies, and I look forward to working with him to ensure a smooth transition," said Denzel.

During the three months ended June 30, 2015, the company recognized a non-cash, non-tax deductible charge for goodwill impairment of $85.9 million related to its ecoATM business segment. The impairment charge reflects the impact of competitive pressures on ecoATM and lowered expectations for future revenue growth. The charge resulted in a GAAP reported loss. Core results exclude the impact of the impairment charge as a non-core adjustment.

2015

2014

Change

Second Quarter

Second Quarter

%

GAAP Results

• Consolidated revenue

$

545.4

million

$

546.5

million

(0.2)

%

• Income (loss) from continuing operations

$

(47.4)

million

$

23.8

million

(298.7)

%

• Net income (loss)

$

(45.6)

million

$

21.8

million

(309.7)

%

• Diluted earnings (loss) from continuing operations per common share*

$

(2.66)

$

1.15

(331.3)

%

• Net cash provided by operating activities

$

75.1

million

$

62.8

million

19.6

%

Core Results**

• Core adjusted EBITDA from continuing operations

$

121.8

million

$

111.7

million

9.1

%

• Core diluted EPS from continuing operations*

$

2.19

$

1.52

44.1

%

• Free cash flow

$

55.6

million

$

36.8

million

51.4

%

*Beginning in the first quarter of 2015, the company applied the two-class method of calculating earnings per share for its GAAP results because the impact of unvested restricted shares as a percentage of total common shares outstanding became more dilutive given the level of stock repurchases over the prior year. Core diluted EPS from continuing operations continues to be reported under the treasury stock method.

**Refer to Appendix A for a discussion of Use of Non-GAAP Financial Measures and Core and Non-Core Results.

Twentieth Century Fox Home Entertainment signed a new two-year, 28-day delay agreement with Redbox and Sony Pictures Home Entertainment recently extended the existing day and date agreement through September 2016

Free cash flow grew 51.4% to $55.6 million bringing the year to date total to $141.0 million

Repurchased 284,537 shares of common stock for $22.0 million and paid another quarterly dividend of $0.30 per share

"In the second quarter, we delivered solid growth in core adjusted EBITDA, core diluted EPS from continuing operations and free cash flow through solid execution as we continue to align costs and capital expenditures with revenue and optimize the kiosk networks. Our performance allows us to raise expectations for core adjusted EBITDA and core diluted EPS from continuing operations and free cash flow for 2015," said Galen C. Smith, Outerwall's chief financial officer.

"We remain committed to our disciplined approach to capital allocation and returning 75-to-100 percent of annual free cash flow to shareholders," continued Smith. "In addition to paying out the quarterly dividend, we repurchased another $22 million in common stock in the quarter."

CONSOLIDATED RESULTS

GAAP Results

Consolidated revenue for the second quarter of 2015 was down slightly to $545.4 million, compared with $546.5 million in the second quarter of 2014, on lower revenue from Redbox nearly offset by higher revenue from ecoATM and Coinstar.

The loss from continuing operations for the second quarter of 2015 was $47.4 million, or $2.66 of diluted loss from continuing operations per common share, compared with income from continuing operations of $23.8 million, or $1.15 of diluted earnings from continuing operations per common share, in the second quarter of 2014, primarily due to the non-cash $85.9 million goodwill impairment charge recognized in the second quarter of 2015.

Net cash provided by operating activities increased 19.6% to $75.1 million in the second quarter of 2015, compared with $62.8 million in the second quarter of 2014. The increase was primarily due to higher Redbox segment operating income and a change in net non-cash income and expense included in net income and a decrease in net cash outflows from changes in working capital.

Cash capital expenditures for the second quarter of 2015 decreased 25.2% to $19.5 million, compared with $26.1 million in the second quarter of 2014, with the decrease primarily related to lower capital expenditures in the company's Redbox and Coinstar segments.

Core Results

Core adjusted EBITDA from continuing operations for the second quarter of 2015 was $121.8 million, which excludes the $85.9 million non-cash goodwill impairment charge and other non-core adjustments, an increase of $10.2 million, or 9.1%, compared with $111.7 million for the second quarter of 2014. The year-over-year increase was primarily due to higher Redbox segment operating income in the second quarter of 2015.

Core diluted EPS from continuing operations for the second quarter of 2015 was $2.19, an increase of 44.1% compared with $1.52 per diluted share in the second quarter of 2014. The increase was primarily attributable to the results of operations described and a reduction in the number of weighted average shares used in the diluted per share calculation due to stock repurchases. Non-core adjustments in the second quarter of 2015 amounted to $4.82 compared with $0.34 in the second quarter of 2014.

Free cash flow for the second quarter of 2015 was $55.6 million, an increase of $18.9 million, or 51.4%, compared with $36.8 million in the second quarter of 2014, primarily driven by higher net operating cash flow and lower capital expenditures.

SEGMENT RESULTS

Redbox

Redbox segment revenue for the second quarter of 2015 was $439.0 million, compared with $442.8 million in the second quarter of 2014, a modest 0.9% year-over-year decline despite a 13.1% decrease in rentals, as the recent price increases largely offset the impact of lower rentals.

Redbox generated approximately 146.0 million rentals in the second quarter of 2015, down from approximately 168.1 million rentals in the second quarter of 2014, primarily driven by a decline in video game rentals from a consumer transition to new generation platforms, lower demand from price-sensitive customers following the price increases, the expected secular decline in the physical market, and the removal of underperforming kiosks. Movie rentals were further impacted by weaker content and the timing of the release slate, as well as an increase in competition for viewing time from several significant theatrical releases during the second quarter of 2015.

Net revenue per rental was $3.00 in the second quarter of 2015, an increase of $0.37, or 14.1%, from $2.63 in the second quarter of 2014. The increase in net revenue per rental was primarily the result of the price increases, partially offset by an expected increase in single night rental activity as a result of the price increases.

Redbox segment operating income in the second quarter of 2015 was $98.9 million, an increase of 14.7%, compared with $86.2 million in the second quarter of 2014. Segment operating margin increased 300 basis points to 22.5% in the second quarter of 2015, compared with segment operating margin of 19.5% in the second quarter of 2014, primarily attributable to a decrease in direct operating expenses, driven by gross margin improvement. Direct operating and marketing expense also improved as the company continued to drive operating efficiencies in the business to align the cost structure with an anticipated gradual decline in physical rental demand.

Coinstar

Coinstar segment revenue was $80.3 million, an increase of $0.4 million, or 0.5%, compared with $79.9 million in the second quarter of 2014, primarily due to the growth in the number of Coinstar Exchange kiosks and transactions partially offset by decreased revenue for Coinstar in the U.S. due to a reduction in volume.

The U.K. business continued to benefit from the increased coin voucher product transaction fee implemented in August 2014, however the benefit was offset by the unfavorable exchange rate impact on U.K. revenue in the second quarter of 2015 due to the strengthening of the U.S. dollar versus the British pound as compared with the second quarter of 2014.

The average Coinstar transaction size increased on a year-over-year basis, while the number of transactions declined for the second quarter of 2015, reflecting larger pours and less frequent visits and a slight decrease in the U.S. kiosk base year-over-year as a result of continued optimization efforts.

Coinstar segment operating income was $31.9 million in the second quarter of 2015, an increase of $1.1 million, or 3.6%, compared with $30.8 million in the second quarter of 2014. Coinstar segment operating margin increased 120 basis points to 39.8% for the second quarter of 2015, compared with 38.6% in the second quarter of 2014, as the business continues to identify opportunities to reduce costs and actively manage expenses.

ecoATM

Revenue in the ecoATM segment was $26.1 million in the second quarter of 2015, an increase of $2.3 million, or 9.5%, compared with $23.8 million in the second quarter of 2014, primarily due to the increase in the number of ecoATM installed kiosks, offset by a lower average selling price on value devices due to a lower mix of higher value devices and lower collections per kiosk compared with the second quarter of 2014.

ecoATM installed approximately 120 net new kiosks in the quarter, primarily in the mass merchant channel, and ended the quarter with a total of 2,260 kiosks installed. During the quarter, ecoATM also redeployed approximately 70 underperforming kiosks from the grocery channel to the mall and mass merchant channels to optimize the profitability of the ecoATM kiosk network.

Collections of value devices on a per kiosk basis were lower in the second quarter of 2015 than in the second quarter of 2014 as a result of fewer transactions at the kiosks, primarily due to competition from carriers. Carrier marketing also impacted the number of higher value devices and the mix of overall value devices collected in the second quarter of 2015, which were the primary reasons for the decline in the average selling price of value devices compared with the second quarter of 2014. Compared with the first quarter of 2015, collections of higher value devices, collections per kiosk and the average selling price improved slightly in the second quarter of 2015 but were below our expectations and historical seasonal trends.

The segment operating loss increased $88.4 million in the second quarter of 2015 to $92.8 million, compared with $4.5 million in the second quarter of 2014, primarily due to the $85.9 million goodwill impairment charge recognized in the second quarter of 2015. Excluding the $85.9 million goodwill impairment charge, the segment operating loss increased $2.5 million, primarily due to an increase in direct operating expenses associated with the increase in the installed kiosk base. As the company continues to install additional ecoATM kiosks and existing kiosks continue to ramp, the company expects to leverage the fixed cost portions of direct operating expenses.

CAPITAL ALLOCATION

On July 28, 2015, the company's board of directors declared a quarterly cash dividend of $0.30 per share expected to be paid on September 15, 2015, to all stockholders of record as of the close of business on August 28, 2015.

During the second quarter of 2015, the company repurchased 284,537 shares of common stock at an average price per share of $77.40 for $22.0 million. As of June 30, 2015, there was approximately $353.4 million remaining under the company's stock repurchase authorization.

2015 ANNUAL GUIDANCE

The following table presents the company's updated full-year 2015 guidance and reflects the company's second quarter results and current outlook on the remainder of the year:

2015 FULL-YEAR GUIDANCE

As of

Dollars in millions, except per share data

July 30, 2015

Consolidated results

Revenue

$2,263 — $2,353

Core adjusted EBITDA from continuing operations(1)

$481 — $515

Core diluted EPS from continuing operations(1)(2)

$8.12 — $9.12

Free cash flow(1)

$231 — $271

Weighted average diluted shares outstanding(2)

17.9 — 18.0

Core effective tax rate

35.5% — 37.5%

Segment revenue

Redbox

$1,850 — $1,925

Coinstar

$313 — $318

ecoATM

$100 — $110

Capital expenditures

Redbox

$15 — $20

Coinstar

$16 — $20

ecoATM

$25 — $34

Corporate

$26 — $33

Total CAPEX

$82 — $107

Net kiosk installations

Redbox

(1,000) — (1,900)

Coinstar

0 — (100)

ecoATM

400 — 500

1

Refer to Appendix A for a discussion of Use of Non-GAAP Financial Measures and Core and Non-Core Results

2

Excludes the impact of any potential share repurchases for the remainder of 2015

ADDITIONAL INFORMATION

Additional information regarding the company's 2015 second quarter operating and financial results and guidance is included in the company's prepared remarks, which, as well as this press release, are posted on the Investor Relations section of the corporate website at ir.outerwall.com.

CONFERENCE CALL

The company will host a conference call today at 2:30 p.m. PDT (5:30 p.m. EDT) to discuss second quarter 2015 earnings results and an update to 2015 guidance. The conference call will be webcast live and archived on the Investor Relations section of Outerwall's website at ir.outerwall.com. A recording of the call will be available approximately two hours after the call ends through August 13, 2015, at 1-855-859-2056 or 1-404-537-3406, using conference ID 74496002.

ABOUT OUTERWALL INC.

Outerwall Inc. (Nasdaq: OUTR) has more than 20 years of experience creating some of the most profitable spaces for their retail partners. The company delivers breakthrough kiosk experiences that delight consumers and generate revenue for retailers. As the company that brought consumers Redbox® entertainment, Coinstar® money services, and ecoATM® electronics recycling kiosks, Outerwall is leading the next generation of automated retail and paving the way for inventive, scalable businesses. Outerwall™ kiosks are in neighborhood grocery stores, drug stores, mass merchants, malls, and other retail locations in the United States, Canada, Puerto Rico, the United Kingdom, and Ireland. Learn more at www.outerwall.com.

SAFE HARBOR FOR FORWARD-LOOKING STATEMENTS

Certain statements in this press release are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. The words "believe," "estimate," "expect," "intend," "will," "anticipate," "goals," variations of such words, and similar expressions identify forward-looking statements, but their absence does not mean that the statement is not forward-looking. The forward-looking statements in this release include statements regarding Outerwall Inc.'s anticipated growth and future operating results, including 2015 full year results. Forward-looking statements are not guarantees of future performance and actual results may vary materially from the results expressed or implied in such statements. Differences may result from actions taken by Outerwall Inc. or its subsidiaries, as well as from risks and uncertainties beyond Outerwall Inc.'s control. Such risks and uncertainties include, but are not limited to,

competition from other entertainment providers,

the ability to achieve the strategic and financial objectives for our entry into new businesses, including ecoATM and SAMPLEit,

our ability to repurchase stock and the availability of an open trading window,

our declaration and payment of dividends, including our board's discretion to change the dividend policy,

the termination, non-renewal or renegotiation on materially adverse terms of our contracts with our significant retailers and suppliers,

payment of increased fees to retailers, suppliers and other third-party providers, including financial service providers,

the timing of new DVD releases and the inability to receive delivery of DVDs on the date of their initial release to the general public, or shortly thereafter, or in sufficient quantity, for home entertainment viewing,

the effective management of our content library,

the timing of the release slate and the relative attractiveness of titles in a particular quarter or year,

the ability to attract new retailers, penetrate new markets and distribution channels and react to changing consumer demands,

loss of key personnel or the inability of replacements to quickly and successfully perform in those new roles,

the ability to generate sufficient cash flow to timely and fully service indebtedness and adhere to certain covenants and restrictions,

the ability to adequately protect our intellectual property, and

the application of substantial federal, state, local and foreign laws and regulations specific to our business.

The foregoing list of risks and uncertainties is illustrative, but by no means exhaustive. For more information on factors that may affect future performance, please review "Risk Factors" described in our most recent Annual Report on Form 10-K and any subsequent Quarterly Reports on Form 10-Q filed with the Securities and Exchange Commission. These forward-looking statements reflect Outerwall Inc.'s expectations as of the date of this press release. Outerwall Inc. undertakes no obligation to update the information provided herein.

(Consolidated Financial Statements, Business Segment Information and Appendix A Follow)

OUTERWALL INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(in thousands, except per share data)

(unaudited)

Three Months Ended

Six Months Ended

June 30,

June 30,

2015

2014

2015

2014

Revenue

$

545,369

$

546,527

$

1,154,005

$

1,144,289

Expenses:

Direct operating(1)

369,619

381,734

774,803

801,376

Marketing

8,047

9,136

16,467

16,129

Research and development

2,039

3,412

4,123

6,886

General and administrative

48,783

48,596

97,339

101,204

Restructuring and lease termination costs

—

—

15,851

557

Goodwill impairment

85,890

—

85,890

—

Depreciation and other

45,174

47,812

87,860

95,754

Amortization of intangible assets

3,309

3,840

6,618

7,682

Total expenses

562,861

494,530

1,088,951

1,029,588

Operating income (loss)

(17,492)

51,997

65,054

114,701

Other income (expense), net:

Loss from equity method investments, net

(133)

(10,541)

(265)

(19,909)

Interest expense, net

(12,183)

(12,932)

(24,254)

(22,580)

Other income (expense), net

642

1,614

(1,704)

966

Total other income (expense), net

(11,674)

(21,859)

(26,223)

(41,523)

Income (loss) from continuing operations before income taxes

(29,166)

30,138

38,831

73,178

Income tax expense

(18,185)

(6,305)

(44,027)

(21,739)

Income (loss) from continuing operations

(47,351)

23,833

(5,196)

51,439

Income (loss) from discontinued operations, net of tax

1,735

(2,080)

(4,821)

(6,511)

Net income (loss)

(45,616)

21,753

(10,017)

44,928

Foreign currency translation adjustment(2)

473

(336)

3,327

539

Comprehensive income (loss)

$

(45,143)

$

21,417

$

(6,690)

$

45,467

Income (loss) from continuing operations attributable to common shares:

Basic

$

(47,472)

$

23,016

$

(5,465)

$

49,880

Diluted

$

(47,472)

$

23,036

$

(5,465)

$

49,918

Basic earnings (loss) per common share:

Continuing operations

$

(2.66)

$

1.18

$

(0.30)

$

2.30

Discontinued operations

0.10

(0.11)

(0.27)

(0.30)

Basic earnings (loss) per common share

$

(2.56)

$

1.07

$

(0.57)

$

2.00

Diluted earnings (loss) per common share:

Continuing operations

$

(2.66)

$

1.15

$

(0.30)

$

2.24

Discontinued operations

0.10

(0.10)

(0.27)

(0.29)

Diluted earnings (loss) per common share

$

(2.56)

$

1.05

$

(0.57)

$

1.95

Weighted average common shares used in basic and diluted per share calculations:

Basic

17,848

19,541

18,057

21,730

Diluted

17,848

20,048

18,057

22,298

Dividends declared per common share

$

0.30

$

—

$

0.60

$

—

(1)

"Direct operating" excludes "Depreciation and other" of $29.6 million and $58.0 million for the three and six months ended June 30, 2015, respectively, and $31.4 million and $63.1 million for the three and six months ended June 30, 2014, respectively.

(2)

Foreign currency translation adjustment had no tax effect for the three and six months ended June 30, 2015 and 2014, respectively.

Purchases of property and equipment financed by capital lease obligations

$

257

$

2,467

$

977

$

5,513

Purchases of property and equipment included in ending accounts payable

$

2,411

$

1,724

$

4,436

$

1,724

Common stock issued on conversion of callable convertible debt

$

—

$

12,715

$

—

$

12,715

Non-cash debt issue costs

$

—

$

6,069

$

—

$

6,069

(1)

During the first quarter of 2015, we discontinued our Redbox operations in Canada. 2014 also includes the wind-down process of certain new ventures that were discontinued during 2013. Cash flows from these discontinued operations are not segregated from cash flows from continuing operations in all periods presented.

(2)

The non-cash restructuring and lease termination costs in the six months ended June 30, 2015 of $1.7 million is composed of $6.9 million in impairments of lease related assets partially offset by a $5.2 million benefit resulting from the lease termination.

During the first quarter of 2015, we added ecoATM, our electronic device recycling business, as a separate reportable segment. Previously, the results of ecoATM along with those of other self-service concepts were included in our New Ventures segment. The combined results of the other self-service concepts, which include product sampling kiosk concept SAMPLEit, are now included in the All Other reporting category in the reconciliation below as they do not meet quantitative thresholds to be reported as a separate segment. All goodwill previously allocated to the New Ventures segment has been allocated to the ecoATM segment.

Comparability of Segment Results

We have recast prior period results for the following:

Discontinued operations, consisting of our Redbox operations in Canada which we shut down during the first quarter of 2015; and

The addition of our ecoATM segment and an All Other reporting category, which we added during the first quarter of 2015.

Our analysis and reconciliation of our segment information to the consolidated financial statements that follows covers our results of operations, which consists of our Redbox, Coinstar and ecoATM segments, Corporate Unallocated expenses and All Other. All Other includes the results of other self-service concepts, which we regularly assess to determine whether continued funding or other alternatives are appropriate.

OUTERWALL INC.

BUSINESS SEGMENT AND ENTERPRISEWIDE INFORMATION

(unaudited)

Dollars in thousands

Three Months Ended June 30, 2015

Redbox

Coinstar

ecoATM

All Other

Corporate Unallocated

Total

Revenue

$

438,976

$

80,279

$

26,062

$

52

$

—

$

545,369

Expenses:

Direct operating

301,444

39,358

27,227

1,078

512

369,619

Marketing

4,266

1,232

2,149

258

142

8,047

Research and development

—

—

1,549

1

489

2,039

General and administrative

34,336

7,768

2,094

2,644

1,941

48,783

Goodwill impairment

—

—

85,890

—

—

85,890

Segment operating income (loss)

98,930

31,921

(92,847)

(3,929)

(3,084)

30,991

Less: depreciation, amortization and other

(33,063)

(8,437)

(6,305)

(678)

—

(48,483)

Operating income (loss)

65,867

23,484

(99,152)

(4,607)

(3,084)

(17,492)

Loss from equity method investments, net

—

—

—

—

(133)

(133)

Interest expense, net

—

—

—

—

(12,183)

(12,183)

Other, net

—

—

—

—

642

642

Income (loss) from continuing operations before income taxes

$

65,867

$

23,484

$

(99,152)

$

(4,607)

$

(14,758)

$

(29,166)

Dollars in thousands

Three Months Ended June 30, 2014

Redbox

Coinstar

ecoATM

All Other

Corporate Unallocated

Total

Revenue

$

442,838

$

79,880

$

23,799

$

10

$

—

$

546,527

Expenses:

Direct operating

317,376

40,203

22,387

436

1,332

381,734

Marketing

5,533

1,557

927

220

899

9,136

Research and development

18

153

1,391

675

1,175

3,412

General and administrative

33,692

7,169

3,564

573

3,598

48,596

Segment operating income (loss)

86,219

30,798

(4,470)

(1,894)

(7,004)

103,649

Less: depreciation, amortization and other

(38,783)

(8,921)

(3,812)

(136)

—

(51,652)

Operating income (loss)

47,436

21,877

(8,282)

(2,030)

(7,004)

51,997

Loss from equity method investments, net

—

—

—

—

(10,541)

(10,541)

Interest expense, net

—

—

—

—

(12,932)

(12,932)

Other, net

—

—

—

—

1,614

1,614

Income (loss) from continuing operations before income taxes

$

47,436

$

21,877

$

(8,282)

$

(2,030)

$

(28,863)

$

30,138

OUTERWALL INC.

BUSINESS SEGMENT AND ENTERPRISEWIDE INFORMATION

(unaudited)

Dollars in thousands

Six Months Ended June 30, 2015

Redbox

Coinstar

ecoATM

All Other

Corporate Unallocated

Total

Revenue

$

958,509

$

149,609

$

45,811

$

76

$

—

$

1,154,005

Expenses:

Direct operating

644,379

76,621

50,033

2,269

1,501

774,803

Marketing

9,091

2,410

3,879

578

509

16,467

Research and development

—

—

3,005

(84)

1,202

4,123

General and administrative

68,071

15,563

4,062

5,151

4,492

97,339

Restructuring and lease termination costs

15,174

550

127

—

—

15,851

Goodwill impairment

—

—

85,890

—

—

85,890

Segment operating income (loss)

221,794

54,465

(101,185)

(7,838)

(7,704)

159,532

Less: depreciation, amortization and other

(64,670)

(16,255)

(12,207)

(1,346)

—

(94,478)

Operating income (loss)

157,124

38,210

(113,392)

(9,184)

(7,704)

65,054

Loss from equity method investments, net

—

—

—

—

(265)

(265)

Interest expense, net

—

—

—

—

(24,254)

(24,254)

Other, net

—

—

—

—

(1,704)

(1,704)

Income (loss) from continuing operations before income taxes

$

157,124

$

38,210

$

(113,392)

$

(9,184)

$

(33,927)

$

38,831

Dollars in thousands

Six Months Ended June 30, 2014

Redbox

Coinstar

ecoATM

All Other

Corporate Unallocated

Total

Revenue

$

955,887

$

148,633

$

39,745

$

24

$

—

$

1,144,289

Expenses:

Direct operating

680,977

77,926

38,318

844

3,311

801,376

Marketing

9,993

2,563

1,595

381

1,597

16,129

Research and development

26

422

3,175

1,307

1,956

6,886

General and administrative

72,393

14,166

6,443

1,494

6,708

101,204

Restructuring and lease termination costs

534

23

—

—

—

557

Segment operating income (loss)

191,964

53,533

(9,786)

(4,002)

(13,572)

218,137

Less: depreciation, amortization and other

(78,187)

(17,484)

(7,524)

(241)

—

(103,436)

Operating income (loss)

113,777

36,049

(17,310)

(4,243)

(13,572)

114,701

Loss from equity method investments, net

—

—

—

—

(19,909)

(19,909)

Interest expense, net

—

—

—

—

(22,580)

(22,580)

Other, net

—

—

—

—

966

966

Income (loss) from continuing operations before income taxes

$

113,777

$

36,049

$

(17,310)

$

(4,243)

$

(55,095)

$

73,178

APPENDIX A

Non-GAAP Financial Measures

Non-GAAP measures may be provided as a complement to results provided in accordance with United States generally accepted accounting principles ("GAAP").

We use the following non-GAAP financial measures to evaluate our financial results:

Core adjusted EBITDA from continuing operations;

Core diluted earnings per share ("EPS") from continuing operations;

Free cash flow; and

Net debt and net leverage ratio.

These measures, the definitions of which are presented below, are non-GAAP because they exclude certain amounts which are included in the most directly comparable measure calculated and presented in accordance with GAAP. Our non-GAAP financial measures are not meant to be considered in isolation or as a substitute for our GAAP financial measures and may not be comparable with similarly titled measures of other companies.

Core and Non-Core Results

We distinguish our core activities, those associated with our primary operations which we directly control, from non-core activities. Non-core activities are primarily nonrecurring events or events we do not directly control. Our non-core adjustments for the periods presented include i) goodwill impairment, ii) restructuring costs (including severance and early lease termination costs and related impairment of assets) associated with actions to reduce costs in our continuing operations across the Company, iii) compensation expense for rights to receive cash issued in conjunction with our acquisition of ecoATM and attributable to post-combination services as they are fixed amount acquisition related awards and not indicative of the directly controllable future business results, iv) income or loss from equity method investments, which represents our share of income or loss from entities we do not consolidate or control, v) tax benefits related to a net operating loss adjustment, and vi) tax benefit related to worthless stock deduction ("Non-Core Adjustments").

We believe investors should consider our core results because they are more indicative of our ongoing performance and trends, are more consistent with how management evaluates our operational results and trends, provide meaningful supplemental information to investors through the exclusion of certain expenses which are either nonrecurring or may not be indicative of our directly controllable business operating results, allow for greater transparency in assessing our performance, help investors better analyze the results of our business and assist in forecasting future periods.

Rights to receive cash issued in connection with the acquisition of ecoATM

0.04

0.13

0.11

0.23

Loss from equity method investments, net

0.01

0.32

0.01

0.53

Tax benefit from net operating loss adjustment

—

—

—

(0.04)

Tax benefit of worthless stock deduction

—

(0.11)

—

(0.10)

Core diluted EPS from continuing operations

$

2.19

$

1.52

$

5.07

$

2.92

(1)

Non-Core Adjustments are presented after-tax using the applicable effective tax rate for the respective periods.

A reconciliation of amounts used in calculating core diluted EPS from continuing operations in the table above is presented in the following table:

Three Months Ended

Six Months Ended

June 30,

June 30,

In thousands

2015

2014

2015

2014

Income (loss) from continuing operations attributable to common shares

$

(47,472)

$

23,036

$

(5,465)

$

49,918

Add: income from continuing operations allocated to participating securities

121

797

269

1,521

Income (loss) from continuing operations

$

(47,351)

$

23,833

$

(5,196)

$

51,439

Weighted average diluted common shares

17,848

20,048

18,057

22,298

Add: diluted common equivalent shares of participating securities

127

133

181

190

Add: dilutive securities under treasury stock method

14

—

16

—

Weighted average diluted shares (treasury stock method)

17,989

20,181

18,254

22,488

Free Cash Flow

Our non-GAAP financial measure free cash flow is defined as net cash provided by operating activities after capital expenditures. We believe free cash flow is an important non-GAAP measure as it provides additional information to users of the financial statements regarding our ability to service, incur or pay down indebtedness and repurchase our securities. A reconciliation of free cash flow to net cash provided by operating activities, the most comparable GAAP financial measure, is presented in the following table:

Three Months Ended

Six Months Ended

June 30,

June 30,

Dollars in thousands

2015

2014

2015

2014

Net cash provided by operating activities

$

75,143

$

62,833

$

181,215

$

157,420

Purchase of property and equipment

(19,508)

(26,076)

(40,217)

(53,016)

Free cash flow

$

55,635

$

36,757

$

140,998

$

104,404

Net Debt and Net Leverage Ratio

Our non-GAAP financial measure net debt is defined as the total face value of outstanding debt, including capital leases, less cash and cash equivalents held in financial institutions domestically. Our non-GAAP financial measure net leverage ratio is defined as net debt divided by core adjusted EBITDA from continuing operations for the last twelve months (LTM). We believe net debt and net leverage ratio are important non-GAAP measures because they:

are used to assess the degree of leverage by management;

provide additional information to users of the financial statements regarding our ability to service, incur or pay down indebtedness and repurchase our securities as well as additional information about our capital structure; and

are reported quarterly to support covenant compliance under our credit agreement.

A reconciliation of net debt to total outstanding debt including capital leases, the most comparable GAAP financial measure, is presented in the following table:

June 30, 2015

December 31, 2014

Dollars in thousands

Senior unsecured notes

$

650,000

$

650,000

Term loans

142,500

146,250

Revolving line of credit

90,000

160,000

Capital leases

9,876

15,391

Total principal value of outstanding debt including capital leases

892,376

971,641

Less domestic cash and cash equivalents held in financial institutions

(62,609)

(66,546)

Net debt

829,767

905,095

LTM Core adjusted EBITDA from continuing operations(1)

$

533,400

$

496,820

Net leverage ratio

1.56

1.82

(1)

LTM Core Adjusted EBITDA from continuing operations for the twelve months ended June 30, 2015 and December 31, 2014 was determined as follows:

Dollars in thousands

Core adjusted EBITDA from continuing operations for the six months ended June 30, 2015

Core adjusted EBITDA from continuing operations for the twelve months ended December 31, 2014 is obtained from our Form 8-K filed on May 8, 2015 for the period ended December 31, 2014, where it is reconciled to net income from continuing operations, the most comparable GAAP financial measure, and represents the LTM core adjusted EBITDA from continuing operations we use in our calculation of net leverage ratio as of December 31, 2014.